|
on Regulation |
| By: | Christian Bontemps (ENAC - Ecole Nationale de l'Aviation Civile, TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Kevin Remmy (université de Mannheim); Johnny Wei |
| Abstract: | In this paper, we estimate a structural model of the domestic US airline market to analyze the eect of the recent merger between American Airlines and US Airways. Our results show that, between 2011 and 2016, a substantial fuel price drop in conjunction with changes in consumer preferences toward direct ights completely rationalizes the observed decrease in prices. However, we estimate that, during the same period, more than half of the consumer welfare increase is due, on top of these environmental changes, to the ex-post optimization of the networks of the newly merged airline and of its competitors. Acknowledgments: We would like to thank the Guest Editors and two anonymous referees for helpful comments. Special thanks to Sara Crompton Meade and Mariane Bontemps for proofreading. Funding from the French National Research Agency (ANR) under the Investments for the Future program (Investissements d'Avenir, grant ANR-17-EURE-0010) is gratefully acknowledged. |
| Keywords: | merger, airlines, network, structural model, nested logit, airfare, demand, supply |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03845873&r=reg |
| By: | Michele Fioretti (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Jorge Tamayo (Harvard Business School - Harvard University [Cambridge]) |
| Abstract: | Renewable generation creates a tradeoff between current and future energy production as generators produce energy by releasing previously stored resources. Studying the Colombian market, we find that diversified firms strategically substitute fossil fuels for hydropower before droughts. This substitution mitigates the surge in market prices due to the lower hydropower capacity available during dry periods. Diversification can increase prices, instead, if it results from mergers steepening a firm's residual demand. Thus, integrating production technologies within firms can smooth the clean-energy transition by offsetting higher prices during scarcity periods if the unaffected technologies help store renewables more than exercise market power. |
| Keywords: | Energy transition, Renewables, Hydropower generation, Diversified production technologies, Energy storage, Wholesale electricity markets |
| Date: | 2021–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:spmain:hal-03389152&r=reg |
| By: | Matteo Romagnoli (Department of Economics, Management and Statistics, Università degli Studi di Milano-Bicocca) |
| Abstract: | The paper investigates the effect of electricity liberalisation on the variety of clean energy patent’ search space to asses whether a more competitive electricity market can foster the development of radical clean-energy technologies. This idea is tested using a cross-section of patents filed in the period 1990-2017, a set of patent-level indicators and an instrumental variable approach. Results show that electricity liberalisation pushes clean-energy patents to cite knowledge from technological fields other than their own. However, the reform does not significantly affect the overall breath of the knowledge base of these patents. Additional insights are drawn by looking at the correlation between electricity liberalisation and an indicator of novelty in patents’ search space. The results are consistent with the claim that electricity liberalisation has a positive effect on the development of radical clean-energy technologies. At the same time, by describing how the reform changes clean-energy patents’ search space, they define this effect more precisely. |
| Keywords: | Clean-energy Technologies, Electricity Liberalisation, Climate Change, Patent Data |
| JEL: | L94 O31 Q42 Q55 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2022.44&r=reg |
| By: | Schlecht, Ingmar; Hirth, Lion; Maurer, Christoph |
| Abstract: | Contracts for differences are widely discussed as a cornerstone of Europe’s future electricity market design. In this paper, we make three contributions to the debate. First, we summarize the dispatch and investment distortions that traditional CfDs cause. Second, we propose an alternative CfD specification that we dub "financial wind CfDs". It is a hybrid between CfDs and forward contracts that aims at being superior to conventional CfDs both in terms of risk mitigation and incentives. Third, we point out that "the other side of the contract", the government’s financial position resulting from any long-term contract with generators, must be carefully handled to avoid muting consumers' flexibility incentives or depleting forward markets. |
| Keywords: | electricity market, market design, contracts for differences, energy economics |
| JEL: | Q4 Q42 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:267597&r=reg |
| By: | Mark R. Jacobsen; James M. Sallee; Joseph S. Shapiro; Arthur A. van Benthem |
| Abstract: | What is a feasible and efficient policy to regulate air pollution from vehicles? A Pigouvian tax is technologically infeasible. Most countries instead rely on exhaust standards that limit air pollution emissions per mile for new vehicles. We assess the effectiveness and efficiency of these standards, which are the centerpiece of US Clean Air Act regulation of transportation, and counterfactual policies. We show that the air pollution emissions per mile of new US vehicles has fallen spectacularly, by over 99 percent, since standards began in 1967. Several research designs with a half century of data suggest that exhaust standards have caused most of this decline. Yet exhaust standards are not cost-effective in part because they fail to encourage scrap of older vehicles, which account for the majority of emissions. To study counterfactual policies, we develop an analytical and a quantitative model of the vehicle fleet. Analysis of these models suggests that tighter exhaust standards increase social welfare and that increasing registration fees on dirty vehicles yields even larger gains by accelerating scrap, though both reforms have complex effects on inequality. |
| JEL: | H21 H23 H70 Q50 R40 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10132&r=reg |
| By: | Emeric Henry (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Marco Loseto (University of Chicago); Marco Ottaviani (Bocconi University [Milan, Italy], BIDSA - Bocconi Institute for Data Science and Analytics - Bocconi University [Milan, Italy], CEPR - Center for Economic Policy Research - CEPR, IGIER) |
| Abstract: | We analyze the optimal mix of ex ante experimentation and ex post learning for the dynamic adoption of activities with uncertain payoffs in a two-phase model of information diffusion. In a first preintroduction phase, costly experimentation is undertaken to decide whether to adopt an activity or abandon experimentation. In a second stage following adoption, learning can continue possibly at a different pace while the activity remains in place; the withdrawal option is exercised following the accumulation of sufficiently bad news. We compare from a law and economics perspective the performance of three regulatory frameworks commonly adopted to govern private experimentation and adoption incentives: liability, withdrawal, and authorization regulation. Liability should be preempted to avoid chilling of activities that generate large positive externalities consistent with the preemption doctrine. Liability should be used to discourage excessive experimentation for activities that generate small positive externalities. Authorization regulation should be lenient whenever it is used consistent with the organization of regulation in a number of areas, ranging from product safety to antitrust. |
| Keywords: | Authorization regulation, Liability, Withdrawal, Experimentation, Preemption doctrine |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:spmain:hal-03874153&r=reg |
| By: | Michele Fioretti (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Alessandro Iaria (University of Bristol [Bristol]); Aljoscha Janssen (SIS - Singapore Management University); Robert K Perrons (QUT - Queensland University of Technology [Brisbane]); Clément Mazet-Sonilhac (Centre de recherche de la Banque de France - Banque de France, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We investigate the effect of technology adoption on competition by leveraging a unique dataset on production, costs, and asset characteristics for North Sea upstream oil & gas companies. Relying on heterogeneity in the geological suitability of fields and a landmark decision of the Norwegian Supreme Court that increased the returns of capital investment in Norway relative to the UK, we show that technology adoption increases market concentration. Firms with prior technology-specific know-how specialize more in fields suitable for the same technology but also invest more in high-risk-high-return fields (e.g., ultra-deep recovery), diversifying their technology portfolio and ultimately gaining larger shares of the North Sea market. Our analyses illustrate how technology adoption can lead to market concentration both directly through specialization and indirectly via experimentation. |
| Keywords: | Market structure, Competition, Specialization, Experimentation, Upstream oil and gas markets, North Sea, Innovation, Adoption |
| Date: | 2022–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:spmain:hal-03791971&r=reg |
| By: | Alix Chaplain (CERI - Centre de recherches internationales (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Éric Verdeil (CERI - Centre de recherches internationales (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Policymakers see decentralized electricity supply as a way to both decarbonize energy systems and to fill the gap of electricity access in many countries where strong growth leave the grid lagging behind. This article sheds some light on the case of countries such as Lebanon, where diesel-fueled decentralized electricity systems have existed for years and increasingly coexist with, rather than being replaced by, solar powered systems. It is based on a synthesis of public quantitative data and qualitative information gathered through surveys. The article argues that understanding such dynamics involves an analysis, not only of the technological and socioeconomic determinants of the adoption of decentralized energy technologies but also of the political struggles between the various actors, with a particular focus on corporate actors, and wealthy users. In addition, the article shows how different political temporalities play in reproducing or opening the assemblage of technologies and interests that shape the hybridized energy landscape. The article also shows that hybridization has repercussions on the energy configuration as a whole, both in the evolving market share of each technology but also by deeply fragmenting the access to electricity along social and territorial lines and by pushing essential private actors to disconnect from the grid. As a conclusion, the promises of sustainable transitions need to be critically examined in light of these trends |
| Keywords: | Lebanon,electricity,solar power,distributed energy,diesel generator |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03814475&r=reg |
| By: | Bos, Iwan; Marini, Marco A. |
| Abstract: | This paper examines a homogeneous-good Bertrand-Edgeworth oligopoly model to explore the role of firm size and number in pricing. We consider the price impact of merger, breakup, investment, divestment, entry, and exit. A merger leads to higher prices only when it increases the size of the largest seller and industry capacity is neither too big nor too small post-merger. Similarly, breaking-up a firm only leads to lower prices when it concerns the biggest producer and aggregate capacity is within an intermediate range. Investment and entry (weakly) reduce prices, whereas divestment and exit yield (weakly) higher prices. Taken together, these findings suggest that size matters more than number in the determination of oligopoly prices. |
| Keywords: | Bertrand-Edgeworth Competition; Edgeworth Price Cycle; Firm Size Distribution; Oligopoly Pricing; Price Dispersion |
| JEL: | D43 L1 L12 L13 |
| Date: | 2022–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115800&r=reg |
| By: | Erik Brynjolfsson; Long Chen; Xijie Gao |
| Abstract: | E-commerce sales have grown rapidly worldwide, massively increasing the availability of new products. We examine data from the largest digital platform in China and find that the number of book titles almost doubled, prices fell somewhat, and most new books are sold to consumers with unusual tastes. Demand for these niche products was significantly more inelastic than that of mass products. Embedding the estimates of demand elasticity into a two-segment CES framework, we find the welfare gain from increased variety was about 40 times the gain from lower prices and that rural consumers enjoyed the largest gains. |
| JEL: | O0 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30802&r=reg |
| By: | Thierry Kirat (IRISSO - Institut de Recherche Interdisciplinaire en Sciences Sociales - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Frédéric Marty (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal, GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po) |
| Abstract: | The article presents the late convergence process from American economists that led them to support a strong antitrust enforcement in the Second New Deal despite their long-standing distrust toward this legislation. It presents the path from which institutionalist economists, on the one side, and members of the First Chicago School, on the other one, have converged on supporting the President F.D. Roosevelt administration towards reinvigorating antitrust law enforcement as of 1938, putting aside their initial preferences for a regulated competition model or for a classical liberalism. The appointment of Thurman Arnold at the head of the Antitrust Division in 1938 gave the impetus to a vigorous antitrust enforcement. The 1945 Alcoa decision crafted by Judge Hand embodied the results of this convergence: in this perspective, the purpose of antitrust law enforcement does consist in preventing improper uses of economic power. |
| Keywords: | Antitrust, Efficiency, Economic Power, Institutional Economics, Chicago School, New Deal |
| Date: | 2021–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:hal:spmain:halshs-03261721&r=reg |
| By: | Nanaeva, Zhamal; Aysan, Ahmet Faruk; Shirazi, Nasim Shah |
| Abstract: | Rapid developments and the adoption of financial technologies (Fintech) lead to radical changes in the delivery of financial services, including enabling fast payment systems. The recent Covid-19 pandemic catalyzed these processes, while Open Banking supports their further advancement. The concept of Open Banking is gaining global recognition for integrating innovative financial service providers into the sustainable financial ecosystem. This paper discusses Open Banking, including its core building blocks, prospects, and challenges. Given the European Union's pioneering role in adopting Open Banking regulations, the paper also reviews the revised Payment Services Directive (PSD2) and its role in advancing the European fast payment systems. Furthermore, the paper analyzes the practical implications of the PSD2 in Germany by reviewing the examples of the banking-as-a-service platform and the Islamic digital bank, Solarisbank and Insha, respectively. Finally, the paper sheds light on the benefits of Open Banking for ecosystem stakeholders, including fast payment system providers, and what they can derive from the introduction of Open Banking regulations. |
| Keywords: | Open Banking, PSD2, Fintechs, Payment Services, Insha, Solarisbank |
| JEL: | E49 G19 O35 P16 Q01 |
| Date: | 2021–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:110763&r=reg |
| By: | Miguel Anton; Florian Ederer; Mireia Gine; Martin C. Schmalz |
| Abstract: | We present a mechanism based on managerial incentives through which common ownership affects product market outcomes. Firm-level variation in common ownership causes variation in managerial incentives and productivity across firms, which leads to intra-industry and intra-firm cross-market variation in prices, output, markups, and market shares that is consistent with empirical evidence. The organizational structure of multiproduct firms and the passivity of common owners determine whether higher prices under common ownership result from higher costs or from higher markups. Using panel regressions and a difference-in-differences design we document that managerial incentives are less performance-sensitive in firms with more common ownership. |
| JEL: | D21 G32 J33 L13 L21 M12 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30785&r=reg |
| By: | Gamp, Tobias (HU Berlin); Krähmer, Daniel (University of Bonn) |
| Abstract: | We study the interplay between quality provision and consumer search in a search market where firms may design products of inferior quality to promote them to naive consumers who fail to fully understand product characteristics. We derive an equilibrium in which both superior and inferior quality is offered and show that as search frictions vanish, the share of firms offering superior goods in the market goes to zero. The presence of inferior products harms sophisticated consumers, as it forces them to search longer to find a superior product. We argue that policy interventions that reduce search frictions such as the standardization of price and package formats may harm welfare. In contrast, reducing the number of naive consumers through transparency policies and education campaigns as well as a minimum quality standard can improve welfare. |
| Keywords: | inferior products; competition; naivete; consumer search; |
| JEL: | D18 D21 D43 D83 |
| Date: | 2022–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:364&r=reg |
| By: | Ekaterina Borisova; Timothy Frye; Koen Schoors; Vladimir Zabolotskiy |
| Abstract: | Understanding demand for state regulation is a foundational issue for social science. To account for this demand, existing theories rooted in market failure and government failure have focused on various forms of trust, but have paid little attention to fear. We test how fear and trust shape demand for government regulation by drawing on especially precise measures of Covid-related regulations gathered in a survey of more than 23, 000 respondents in 61 Russian regions. We show that fear of contracting the virus is directly related to greater demand for regulation. In addition, the impact of trust is conditional on the level of fear. Higher interpersonal trust is related to lower demand for Covid-19 regulation, while higher institutional trust is associated with greater demand, but, provided fear is sufficiently great, demand for regulation will be high regardless of levels of interpersonal and institutional trust. These results inform debates about theories of regulation, identify critical scope conditions for existing research on trust and demand for regulation, and open a fruitful line of research by examining how fear of social bads shapes support for state intervention. |
| Keywords: | fear, trust, demand for regulation, Covid-19, Russia |
| JEL: | D64 H11 I12 Z13 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10156&r=reg |
| By: | Till Kösters (Institute of Transport Economics, Muenster); Marlena Meier (Institute of Transport Economics, Muenster); Gernot Sieg (Institute of Transport Economics, Muenster) |
| Abstract: | Grandfather rights require airlines to operate at least 80% of their slots, if they are to keep them in the next scheduling period. To prevent losing slots, the airlines may operate slot-rescue flights, an airline strategy called slot hoarding. We model strategies of a monopolistic airline which chooses between long-haul and short-haul flights at a slot-coordinated airport. In cases of a binding use-it-or-lose-it rule, we observe a bias in the airline route network in favor of slot-rescue flights on short-haul distances. Slot-rescue flights reduce airline profits, but raise consumer surplus and airport profits. The overall effect of slot-rescue flights on welfare, however, remains ambiguous. Recently, slot hoarding and its climate impact have received considerable attention during the COVID-19 pandemic. We show that the environmental effects of slot-rescue flights are asymmetric. The climate damage of slot hoarding in the EU is reduced by the EU ETS, whereas CORSIA is rather ineffective. |
| Keywords: | Use-it-or-lose-it rule, Slot hoarding, Climate damage, EU ETS, CORSIA, COVID-19 |
| JEL: | L93 R48 Q51 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:mut:wpaper:36&r=reg |
| By: | Bertin Martens |
| Abstract: | This paper explores several pro- and anti-competitive provisions included the proposed EU Data Act. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:node_8645&r=reg |
| By: | Oz Shy; Joanna Stavins |
| Abstract: | Banks impose a variety of account fees, and credit card issuers impose a variety of fees related to card usage. Using detailed data from a 2021 representative diary survey of US consumers, we investigate whether lower-income consumers and Black consumers are more likely to pay bank account or credit card fees, and how payment behavior varies depending on paying such fees. We find that the probability of paying several types of bank account and credit card fees is correlated with consumers’ demographic attributes and payment behavior. The percentage of Black consumers who pay overdraft or low-balance fees on their bank accounts or pay late fees or cash-advance fees on their credit cards is higher than the percentage of White consumers who pay those fees. We find that lower-income consumers were significantly more likely to pay overdraft fees, and Black consumers were significantly more likely to pay any bank account fee when we hold income and account balances constant in the regressions. However, when controlling for income, we find that the race effect was smaller than in the summary statistics. |
| Keywords: | payment choice; bank account fees; credit card fees; fees by demographics |
| JEL: | D14 G21 G5 |
| Date: | 2022–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:95299&r=reg |
| By: | Haselmann, Rainer; Sarkar, Arkodipta; Singla, Shikhar; Vig, Vikrant |
| Abstract: | Increased interdependencies across countries have led to calls for greater harmonization of regulations to prevent local shock from spilling over to other countries. Using the rulemaking process of the Basel Committee on Banking Supervision (BCBS), this paper studies the process through which harmonization is achieved. Through leaked voting records, we document that the probability of a regulator opposing an initiative increases if their domestic national champion (NC) opposes the new rule, particularly when the proposed rule disproportionately affects them. Next, we show that smaller banks, even when they collectively have a higher share in the domestic market, do not have any impact on regulators' stand - suggesting that regulators' support for NCs is not guided by their national interest. Further, we find the effect is driven by regulators who had prior experience working in large banks. Finally, we show this unanimous decision-making process results in significant watering down of proposed rules. Overall, the results highlight the limits of harmonization of international financial regulation. |
| Keywords: | Political Economy, Financial Regulation, Textual Analysis |
| JEL: | P43 G28 G21 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:45&r=reg |
| By: | Johannes Boehm (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Jan Sonntag (Sciences Po - Sciences Po) |
| Abstract: | This paper studies the prevalence of potential anticompetitive effects of vertical mergers using a novel data set on U.S. and international buyer-seller relationships and across a large range of industries. We find that relationships are more likely to break when suppliers vertically integrate with one of the buyers' competitors than when they vertically integrate with an unrelated firm. This relationship holds for both domestic and cross-border mergers and for domestic and international relationships. It also holds when instrumenting mergers using exogenous downward pressure on the supplier's stock prices, suggesting that reverse causality is unlikely to explain the result. In contrast, the relationship vanishes when using rumored or announced but not completed integration events. Firms experience a substantial drop in sales when one of their suppliers integrates with one of their competitors. This sales drop is mitigated if the firm has alternative suppliers in place. These findings are consistent with anticompetitive effects of vertical mergers, such as vertical foreclosure, rising input costs for rivals, or self-foreclosure. This paper was accepted by Joshua Gans, business strategy. |
| Keywords: | Mergers and acquisitions,Market foreclosure,Vertical integration,Production networks |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03877289&r=reg |